VOLTAS

Pole player in cooling solutions

Voltas Ltd, belonging to the illustrious industrial house of Tatas, is an Indian multinational company engaged in the manufacture of home appliances and consumer electronics. Mumbai-headquartered Voltas designs, develops, manufactures and markets products including air conditioners, air coolers, refrigerators, washing machines, dishwashters, microwaves, air purifiers and water dispensers. The company also enjoys a strong position in the projects business both at home and abroad. It is doing financially well and its prospects going ahead are all the more promising. Consider:

• Voltas is an undisputed market leader in a highly competitive residential air-conditioner market dominated by domestic as well as global players. The company offers a comprehensive range of cooling solutions, including not only air-conditioners but also air coolers, water coolers, water dispensers and commercial refrigeration products. What is more, the company enjoys its dominating position in this market for the last seven years and is likely to maintain its lead for several years as the number two is still far away from it.
• The company has entered the booming Rs 76,400- crore white goods market through a joint venture with Arcelik, a leading Turkish company, whose appliances are being sold under the brand name Voltas-Beko and include refrigerators, washing machines, microwave ovens and dish washers. , the consumer durables market is highly underpenetrated in the country and Voltas is well-positioned to capture the opportunity with more than 19,000 consumer touch points and 130+ EBOs.
• Besides a strong market presence, Voltas has a vast distribution network. During the last ten years, its distribution network has grown 15 times to more than 19,000 consumer touch points across the length and breadth of the country. The company is focusing on expanding its footprint through more exclusive brand outlets across tier 2 and 3 cities. The Voltas and Voltas-Beko brands are now available at 130+ EBOs in the country.

PROJECT KING

• Besides cooling solutions and home appliances, Voltas is also engaged in providing engineering solutions. As a project specialist, it enjoys a strong presence in India, the Middle East, South East Asia and Africa. Recognised throughout the world for its engineering process, the company’s projects business provides MEP (mechanical, electrical and plumbing) and HVAC (heat, ventilation and air-conditioning) solutions and has successfully implemented several landmark projects in India and overseas. The company also works closely with the Government of India for various rural electrification and water management projects. The engineering products and services business represents leading equipment manufacturers in textile machinery and mining and construction equipment for sale, distribution and after-sales service.
• The company is steadily growing on the financial performance front. During the last 12 years, its consolidated revenues have expanded from Rs 5,191 crore in fiscal year 2011 to Rs 7,954 crore in fiscal year 2022, with operating profit inching up from Rs 464 crore to Rs 572 crore and the profit at net level rising from Rs 352 crore to Rs 506 crore. The company’s financial position is very strong, with reserves at the end of March 2022 standing at Rs 5,558 crore – over 167 times its equity capital of Rs 33 crore.
• Some analysts have expressed concern about the huge debt of Rs 393 crore that the company’s balance sheet carries. At the same time, the company has liabilities of Rs 3,480 crore falling due within a year and liabilities of Rs 155 crore due beyond that. However, offsetting these obligations, it has cash of Rs 1,230 crore as well as receivables valued at Rs 2,600 crore due within 12 months. This means the company actually has Rs 194 crore more liquid assets than total liabilities.
• Realising the future growth potential of the company, Life Insurance Corporation, the giant investor in the stock market, has raised its stake in Voltas to 2,93,95,224 equity shares, which works out to 8.884 per cent of the company’s equity capital.

SOUND PORTFOLIO

In short, Voltas is a good investment bet. It has a diversified revenue stream with a strong presence in unitary products, engineering projects and engineering products. It also has a portfolio of rural electrification and water treatment plants across the government as well as private sector. This is a stock worth including by every investor.

CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)

PARAMOUNT COMMUNICATIONS

All that clients need in cables

New Delhi-headquartered Paramount Communications, a part of the Paramount Cables group, is one of the India’s leading wire and cable manufacturing companies. With over six decades of operations, the group, promoted by the late Shyam Sundar Aggarwal way back in 1955, has built up a portfolio spanning a comprehensive range, including HV and LV power cables, optical fibre cables, other telecom cables, railway cables, specialized cables, instrumentation and data cables, and fire survival cables. With a wide product basket and superior technical expertise, Paramount caters to the requirements of national and international customers from almost all sectors of the economy, including power, telecom, railways, information technology, construction, defence and space research.

With a focus on manufacturing excellence, technological advancement and customer satisfaction, the company continuously strives to meet and exceed global quality benchmarks and to provide total cabling solutions for its customers.

However, the company’s performance on the financial front is dismal, with sales turnover moving in a groove between Rs 400 crore and Rs 700 crore. The performance on the profitability front is no better. After remaining in the red for several years, it has started making nominal profits. After 2008, the company has not paid any dividend to its shareholders. However, it seems that things have started changing for the better. Consider:

• The company caters to a diverse range of industries with a wide range of technologically advanced cables, cords and wires for telecommunication, railways, space research, thermal and nuclear power plants, petrochemical, fertilisers, electronics and various other industries. Most of these sectors are doing very well and there has been a steady demand from them for the company’s products.

TOP QUALITY

• Paramount has always laid a major emphasis on keeping abreast with the latest international developments, focusing and adapting technology to create multi-faceted need-based products for utilization in various spheres of industrial activity.
• The company has been awarded ISO 9001 and 14001 by Moody International, bearing eloquent testimony to the stringent quality that is considered to be its hallmark. The company has also got several Indian specifications. It is licenced by the Bureau of Indian Standards (BIS) to mark its products with IS 7098 Part I for XLPE power cables, IS 14255 for Ariel bunch cables, IST IS694 for PVC cables and IS 1554 Part I for armoured PVC cables).
• These certifications have attracted several buyers – domestic as well as foreign. Among the domestic clients are Power Grid Corporation of India, National Thermal Power Corporation, Bharat Heavy Electricals (BHEL), Department of Atomic Energy of the Government of India, and Indian Oil Corporation. As far as foreign clients are concerned, the company has executed orders for reputed international corporations and agencies in several countries, including th eUAE, Qatar, Iran, Kuwait, Jordan, Oman, Africa, Sri Lanka, Ukraine, Chile, Tanzania, Ghana, Kenya, Zambia, Nepal, Bangladesh and Nigeria.

The company was overburdened with debt of Rs 471 crore in fiscal 2011. But the management has systematically strived to bring down the debt to Rs 181 crore by fiscal 2022. If the pace of debt reduction process is any guide, the company will be able to wipe out its debt within a couple of years or so. Once the balance sheet becomes lean, shareholders can expect reasonably good returns as after 2008, the company has not been paying any dividend.

BETTER PROSPECTS

• The company has started improving its financial performance. The sales turnover, which had declined from Rs 704 crore in fiscal 2011 to Rs 362 crore in fiscal 2017, has gradually recovered to Rs 580 crore in fiscal 2022. Operating profit, which was negative till 2018, started rising from fiscal 2019 to Rs 12 crore and has inched up to Rs 20 crore in fiscal 2022.

Shares with a face value of Rs 2 are available at an attractive price of Rs 23. Discerning investors can certainly take a risk by investing in this company, and I am sure likely to be rewarded handsomely in the medium to long term.

PERFORMANCE INDICATORS (Rs. in crore)